CRNT - Aviat Networks: Decent Quarter But Successful Pasolink Integration Will Be Key Going Forward
2024-02-08 21:10:15 ET
Summary
- Aviat Networks reported decent Q2/FY2024 results with revenues, gross margins and Adjusted EBITDA all reaching new multi-year highs.
- During the quarter, the company closed the acquisition of Pasolink, the former microwave backhaul business of Japanese information and communication technology giant NEC Corporation.
- Going forward, much will depend on Aviat Networks' ability to integrate Pasolink's products and operations, improve the margin profile and identify potential cross-selling opportunities.
- Even when discounting the risks associated with Pasolink acquisition and the company's rather moderate organic growth rate, Aviat Networks appears cheap relative to industry averages and closest competitor Ceragon Networks.
- Lowering rating from "Strong Buy" to "Buy" to account for the company's increased risk profile and initial negative impact from the Pasolink acquisition.
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Aviat Networks: Decent Quarter, But Successful Pasolink Integration Will Be Key Going Forward